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Brexit: Official forecasts suggest economies throughout UK will be hit

Brexit: Official forecasts suggest economies throughout UK will be hit

  • 7 February 2018
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  • Brexit
Image copyright PA

Parts of the UK that backed a Leave vote would face the heaviest hit as a result of Brexit, according to estimates by government officials.

The forecasts, seen by MPs, model the 15-year impact of the UK staying in the single market, doing a trade deal with the EU or leaving without a deal.

They suggest that in England, the North East and West Midlands would see the biggest slowdown in growth.

The government says the studies do not cover all outcomes.

And one Eurosceptic Tory MP said the figures were "complete nonsense".

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Following a leak of some of the information to Buzzfeed last week, and political pressure to release it, ministers agreed to allow MPs to see the reports on a confidential basis in the House of Commons library.

In each scenario, growth would be lower, by 2%, 5% and 8% respectively, than currently forecast over a 15-year period.

In north-east England growth would be 3% lower if the UK stayed in the single market, 11% under a trade deal and 16% with no trade deal compared with staying in the EU.

The research suggests London - which backed Remain - would fare the best, with reductions of 1%, 2% and 2.5% in each of the three scenarios.

Scotland's estimated hit would be 2.5%, 6% and 9%. Wales would see reductions of 1.5%, 5.5% and 9.5%.

Brexit-backing Conservative MP Jacob Rees-Mogg has accused Treasury officials of "fiddling the figures" to make all options but staying in the EU look bad.

Whitehall trade union reacted angrily to this suggestion and government ministers have dismissed his allegation.

Government assessment of Brexit deals on economic growth over 15 years compared to current forecasts
Government region Single market Free trade No deal
East Midlands -1.8% -5% -8.5%
Eastern -1.8% -5% -8%
London -1% -2% -3.5%
North-East -3% -11% -16%
North-West -2.5% -8% -12%
South-East -1.5% -4.5% -7.5%
South-West -1% -2% -5%
West Midlands -2.5% -8% -13%
Yorkshire and Humber -1.5% -5% -7%
Northern Ireland -2.5% -8% -12%
Scotland -2.5% -6% -9%
Wales -1.5% -5.5% -9.5%
UK -2% -5% -8%

The government has said the analysis is preliminary and crucially does not measure the impact of the UK's preferred option of a bespoke and comprehensive trade agreement, covering goods and financial services.

The research suggests that the option of staying in the single market and customs union, which has been rejected by ministers, would be the least damaging but would still see growth across different parts of the country between 1% and 3% lower than current forecasts.

In the event of a limited free trade deal being negotiated, projected growth would be 8% lower in the West Midlands, north-west England and Northern Ireland, by 6% in Scotland and 5.5% in Wales.

Should the UK leave the EU in March 2019 without any kind of deal, it suggests four parts of the UK would see a double digit slowdown in GDP growth.

As well as north-east England, north-west England and Northern Ireland would see a 12% slowdown, while the West Midlands would see a 13% slowdown.

Other official estimates suggest the UK car industry's GDP would shrink by 1% if the UK remained in the EU single market but would lose 8% if there was a free trade agreement and 8.5% if the UK left without a deal and went to World Trade Organisation (WTO) rules.

The figures emerged as representatives of Nissan and other Japanese companies are set to meet Theresa May and Chancellor Philip Hammond on Thursday.

Former attorney general and Conservative MP Dominic Grieve said the figures illustrated the risks of leaving the EU without a deal, which he said would hurt the "poorest and vulnerable" in society.

Even if the UK achieved its stated objective of a deep and special partnership with the EU and trade deals with countries like the US, he said it was likely to yield, at best, a very small economic boost.

But Eurosceptic Conservative MP John Redwood said the risks of a no-deal scenario had been overestimated and the Treasury figures were "complete nonsense".